Former intelligence official a source for Chau Chak Wing story: court

A former Australian intelligence official whose wife was jailed over a UN bribery plot was one of three confidential sources who spoke to Fairfax Media before it published a story linking Chinese-Australian billionaire Chau Chak Wing to the scandal, the Federal Court has heard.

Mr Chau, one of Australia's most generous political donors, is suing the publisher of The Sydney Morning Herald and The Age over an online article titled "Are Chau Chak Wing's circles of influence in Australia-China ties built on hot air?", which was published on October 16, 2015.

Chau Chak Wing leaves the Federal Court.Credit:AAP

He alleges the article defamed him by accusing him of participating in a conspiracy in 2013 to bribe former UN general assembly president John Ashe; acting in "so seriously wrong a manner as to deserve extradition" to the US on bribery charges; and building an Australian business empire by making "illicit payments" to government officials.

Fairfax Media denies the article conveyed those allegations. In the event the court finds it did so, the publisher has also pleaded the defence of qualified privilege, which requires a media outlet to show a defamatory article was of public interest and it acted reasonably in publishing it.

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Former Fairfax Media Asia Pacific editor John Garnaut, who wrote the article and is also being sued, told the Federal Court on Thursday he spoke to Roger Uren, who worked for Australian intelligence agency the Office of National Assessments until 2001, before he published the article.

Mr Uren's wife, Sheri Yan, was charged in 2015 with arranging a $US200,000 bribe for Mr Ashe in 2013. She was sentenced by a US court in July 2016 to 20 months in prison.

Mr Uren was originally a confidential source for the article but agreed his identity could be revealed during the Federal Court hearing. Two other sources relied upon by Mr Garnaut, a former adviser to Prime Minister Malcolm Turnbull, have not been named.

John Garnaut outside the Federal Court in Sydney.Credit:Peter Rae

Mr Garnaut told the court Mr Uren said after charges were laid against his wife that she would "never do anything ... illegal or improper".

Mr Uren told him Mr Chau had paid the $200,000 to Mr Ashe as a "speaker's fee" for attending an event at Mr Chau's Imperial Springs resort in Guangzhou.

Mr Garnaut said he believed Mr Uren expressed the view it was "incongruous" or "unfair" that his wife had been arrested for facilitating the payment "when the payer had not been arrested".

The court has heard Mr Chau was not named in documents released by the US Department of Justice when charges were laid against Ms Yan and her finance chief Heidi Park.

However, Mr Garnaut believed Mr Chau was an unindicted co-conspirator identified in the documents as CC-3, whose company was said to be the source of the funds. Mr Garnaut formed this view based on his conversation with Mr Uren and others, as well as the wording of the documents.

Asked by Justice Michael Wigney why he didn't contact the US Justice Department or the author of its press release before publishing the article naming Mr Chau as CC-3, Mr Garnaut said he had "no contacts" in the department.

Mr Garnaut was asked repeatedly to explain an email he sent to a colleague shortly before the article was published, saying Mr Chau was "f---ed".

He denied this meant Mr Chau was guilty. He said he meant Mr Chau was "in trouble" because no obvious exculpatory version of events had been offered by Mr Chau or his daughter Winky Chow when contacted by Fairfax Media before the article was published.

He said it was "at the forefront of my mind" that Mr Chau was entitled to the presumption of innocence. The hearing continues on Friday.